Fleet News

Guest opinion: Euro V a threat to CO2 friendly diesel

IN the past five years, diesel growth has dominated the new car market.

In 2004, nearly one in three new models had a diesel engine. Back in 1999, it was just over one in 10. In terms of volume, sales soared 175% from 303,925 to 835,334 new cars. Even in 2005, diesel has continued its drive, bucking the downward trend in sales, climbing 4.5%.

Both private and fleet buyers have played a part in this success story. But the lion’s share of growth is down to non-private buyers. Driven by changes to company car tax in 2002, fleet buyers and drivers embraced the financial benefits of switching to lower CO2 emitting models. In 2004, fleet registrations accounted for 539,488 models, 65% of the overall diesel market.

An upturn in diesel sales has helped drive down average carbon dioxide emissions from all new cars. Today’s new car emits around 10% less than one sold in the UK just six years ago.

Politically, CO2 emissions take centre stage and rightly so. Fiscal measures like UK company car tax and VED are now exclusively carbon dioxide-based. However, the challenge for regulators now comes in terms of limits for regulated emissions like diesel particulates. The industry has already made significant progress.

Engine technologies like exhaust gas recirculation and emission control measures have played a part in reducing particulate output at the tailpipe. Indeed emission limits, set in ‘type approval’ regulation, have been cut by 90% in the last 15 years. The question now is how much further should we go?

The industry has a responsibility to make engines cleaner but we need to keep this responsibility in the context of an overall bag of emission targets. There is a danger that over-regulating one type of emission could distort the market and thereby have an adverse effect on another.

The European Commission has set emissions limits for new vehicles since the early ’90s. From particulate levels of 0.18 g/km for Euro 1, the latest Euro IV cars must emit no more than 0.025g/km.

The next benchmark comes with Euro 5. This needs to be treated with the utmost care. So far, we do not know what limits will be set. The commission has said it will not be in a position to submit a proposal to European Parliament before the second half of the year.

What we do know is that a heavy-handed approach to particulate limits could bring an about-turn in diesel’s renaissance. If limits are too onerous, it could lead to higher production and engineering costs for diesel models through things like fitting particulate traps as standard, even to smaller models.

The effect on the diesel market could be marked. Higher costs means more expensive cars. The market could tail off and even start to decline as the end-of-decade Euro V deadline approaches. The knock-on effect would be felt in CO2 emissions. Declining diesel demand across Europe would hinder the industry’s drive to cut CO2 emissions from new cars. In the UK, it would also be an own goal for government and its commitment to cut carbon dioxide emissions from all forms of road transport.

Regulators face a challenge with Euro V. Emissions like particulates need to be cut but the market for an engine which brings benefits in terms of lower CO2 emissions must not be damaged as a result. The starting point comes through a careful cost-benefit analysis. Without this, significant costs to manufacturers could be overlooked in the drive to impose the toughest possible limits.

This would take us in the wrong direction. It would also fly in the face of the European Commission’s CARS21 initiative which seeks to balance the often conflicting demands of environmental and social legislation, with the need to keep the European automotive industry highly competitive, with longer term economic viability.

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